Head of data, Rhys Jackson, explores the one metric that matters when it comes to the biggest pain in your business.
Today we’re going to be talking about achieving focus with data. Before we crack on with that I thought we’d play a little game to see who knows what this is?
Metallica yeah. It’s the 1988 final cover to Metallica’s single for One, which was famously on And Justice For All album, I’m sure you all know it. Of course, the reason that we’re talking about this is the link that I guess you’ve all figured out by now, is today we’re going to be talking about the one metric that matters. In my mind, the one metric that matters is the metric that best describes, or most effectively describes, the single biggest pain that your business is feeling at that moment in time.
It changes over time. So we might look to the business lifecycle, which might typically look like this as a business transforms from a start-up to a growing business, a more maturing business, and as they go through the process of product innovation, new product cycles, and so on. They would experience very different pains over that time, and the one metric that matters is the one that most effectively describes the biggest problem that the business is experiencing at any moment in time.
For example, a start-up might be much more focused on the product, finding the right product to bring to the market, finding the right audience for that product. A much more established, mature business might be looking at retention to make sure that the customer base that they developed over many years is being retained effectively.
If we take a look for a moment at the world of manufacturing, you might come across the Theory of Constraints. This theory says that any time spent not focusing on the biggest bottleneck of your business, focusing on the thing that’s slowing you down, is effectively time wasted, because you’re still going to have this bottleneck in your business.
Another way to look at it is if you imagine a group of hikers, the group is only ever going to travel as fast as the slowest person in the group. Another way to look at it might be this, so traditionally this Theory of Constraints comes from the world of manufacturing. If you imagine this is a conveyor belt, you can see here that number C is the slowest, flipped on its sides that’s your marketing funnel, yeah?
So, identifying the bottleneck in your business is the first step to achieving success. If we go back to examples we were looking at around product growth and retention, the kinds of things, the metrics, that you might typically be looking at in these areas are average review score, product return rates, the number of sign-ups you can get for your brand new holding page before your product is launched, these are much more a round kind of product. Growth might be looking at active users, the Net Promoter Score, and things like that, and retention is going to be much more around the metrics related to things like churn rate, lifetime value, and repeat custom.
If you’re not quite sure where to start with identifying your biggest pain point, hopefully, you speak to enough people it’ll jump out at you, you’ll understand what the big problem is, but if you’re not quite sure, maybe start taking a look at some of these metrics, put them in a matrix, heat map them, whatever works for you, to pull out the ones that you think you should be focusing on.
You might be asking, having done that matrix, “Why would we only look at one metric? We’ve got this amazing report that’s telling us churn rate, Net Promoter Score, growth rate, retention rate, lifetime value, and all these kinds of things, shouldn’t we look at all of that, and keep an eye on the bigger picture?” Absolutely not. Remember, you’re only as fast as the biggest bottleneck.
So, to wrap this all up into one, dare I say the word, actionable framework that will help you to put this into action, I suggest that we follow the following structure. You might find that as your business grows obviously this framework might be specific to one team, but as a smaller business, this would typically be organisation wide.
Ask yourself, “What is the one metric that matters? What is our biggest pain point at the moment?” Use analysis to understand, what should we be doing about this? This is where your testing tools, your user surveys come in, understanding what could we be doing? It’s hypothesis generation, what could we be doing about it? Use testing to prove whether it worked or not, whether you are actually resolving or solving the problem. Report back to the business on what’s going on, and iterate. Define the strategy going forward.
Thank you very much.